Goldman Sachs Wallops earnings estimates for stronger than anticipated bond buying and selling
Goldman Sachs released third quarter results on Wednesday that shattered analysts’ earnings estimates on stronger-than-expected results in bond trading and asset management.
The company posted profits of $ 3.62 billion, or a record $ 9.68 per share, beating the estimate of $ 5.57 per share by analysts surveyed by Refinitiv. Company-wide revenue grew 30% to $ 10.78 billion, beating estimate by more than $ 1 billion due to trading and wealth management.
The bank’s shares rose 0.6% after previously rising 2.2% in premarket trading.
“Our ability to serve customers who are in a very uncertain environment has resulted in strong performance across the franchise space and built a strong first half,” said CEO David Solomon in the press release.
The commercial division had sales of $ 4.55 billion, a 29% increase over the previous year. That gain was fueled by $ 2.5 billion in bond trading results, nearly $ half a billion more than analysts surveyed by FactSet expected. Stock trading sales of $ 2.05 billion were largely in line with expectations.
The Asset Management division had sales of $ 2.77 billion, up 71 percent year over year and nearly $ 900 million more than the FactSet estimate of $ 1.91 billion.
Goldman said the result was due to “significantly higher” income from equity and loan and debt investments. The bank holds a portfolio of stocks of public and private companies in this line of business, and higher market levels in public stocks are driving the pace there, the company said.
Solomon has just completed his sophomore year at Goldman Sachs, but he is still shaping the company. Last month he restructured several of his businesses and appointed new heads for Asset Management and Consumer and Wealth Management for the New York-based bank.
The 151-year-old investment bank is in the midst of change, launching a range of digital banking products to disrupt established retail competitors.
It is also pushing for more wealth management revenue like rival Morgan Stanley but has not announced megadeals like the two big acquisitions Morgan Stanley announced earlier this year.
Goldman stock is down 8.3% this year through Tuesday, a smaller decline than most major banks and a 31% decline in the KBW bank index.
As for the other bank profits, Bank of America announced on Wednesday that it had total revenue of $ 20.45 billion, missing the estimate of $ 20.8 billion asked by Refinitv. Wells Fargo reported disappointing third quarter earnings as low interest rates put pressure on the bank’s net interest income.
On Tuesday, rivals JPMorgan Chase and Citigroup released results that exceeded analysts’ expectations as both banks made less money available for defaulting loans.
This is how the company did it:
Earnings: $ 9.68 per share versus $ 5.57 expected according to Refinitiv’s consensus estimate.
Revenue: $ 10.78 billion versus $ 9.46 billion.
Trading Revenue: Fixed Income of $ 2.5 billion versus $ 2.03 billion in FactSet estimate, stocks of $ 2.05 billion versus $ 2.02 billion.